Small and medium enterprises (SMEs) are expecting stronger business conditions in the lead up to the new financial year, with an increase in business growth predicted over the next six months, according to the Commonwealth Bank’s SME Confidence Report.
Strong revenue and profit growth is anticipated by Australian SMEs over the next six months, with 50 per cent expecting an increase in revenue and 46 per cent expecting an increase in profit.
The research, released today, also found that 39 per cent of SMEs are expecting business conditions in Australia to improve, with only one in ten (11 per cent) expecting conditions to decline.
Businesses cited better domestic economic conditions (49 per cent), an increase in business confidence (40 per cent) and an increase in consumer confidence (36 per cent) as the key factors driving business growth.
“These findings indicate SMEs are optimistic the Australian economy will continue to gather momentum, with almost 90 per cent of businesses expecting conditions to either improve or remain steady over the next six months,” said Adam Bennett, Executive General Manager Local Business Banking, Commonwealth Bank.
“Overall economic conditions look largely positive, with strong employment growth, low interest rates and a healthy housing market supporting improving business confidence and spending patterns,” said Mr Bennett.
The SME Confidence Report measures confidence among Australian businesses with an annual turnover of $500,000 to $25m and explores the key challenges and opportunities surrounding these businesses in the current economic environment.
When it came to outlining how they expect to drive growth over the next six months, businesses cited cost reduction (48 per cent), staff performance (41 per cent), improved customer experience (31 per cent) and improved financial controls and management (29 per cent) as key priorities.
The research also outlined key challenges that may prevent businesses from achieving the growth they are predicting for 2014:
“In an increasingly competitive environment, we understand that businesses face challenges from both a macro and day-to-day business management perspective. While businesses appear to be more optimistic about the future, there are still key areas where they could do with more support, such as cash flow and financial management.
“These are areas where expert advice can make a significant difference. For example, CommBank’s Daily IQ analytics app helps businesses with their financial management, marketing and sales activities and better meeting customer needs. Likewise, our BetterBusiness cash flow tracker can assist businesses forecast future cash flows and track results,” concluded Mr Bennett.
About the Commonwealth Bank SME Confidence Report